One of the things I love about Dom3

[Sombre]

I think it's pretty clear what is meant. "Units which retreat are eliminated". Yes, they are under the normal non-siege-specific condition that there are no friendly provinces to retreat to. Something which is covered by the manual elsewhere. I guess it's /possible/ we are supposed to infer that the author assumes there are no bordering friendly provinces in a siege situation (which would just make it poorly written). But let's be real, the manual just has it wrong. You'll only find the statement ambiguous if you really go looking for ambiguity.

[Illuminated One]

It's questionable to rely on the manual for battle strategy on any case imo.
You might have a relatively good plan in "theory" i.e. worked out from the manual, that does fail completely in practice for reasons of battle placement and AI (as soon as you are into range your script runs out and the AI takes over for example or AI choosing the perfect target...).